China Resources Medical Holdings Company Limited (HKG:1515), which is in the healthcare business, and is based in China, saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine China Resources Medical Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What's the opportunity in China Resources Medical Holdings?
Good news, investors! China Resources Medical Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$8.14, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that China Resources Medical Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will China Resources Medical Holdings generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 7.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for China Resources Medical Holdings, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since 1515 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 1515 for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1515. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on China Resources Medical Holdings. You can find everything you need to know about China Resources Medical Holdings in the latest infographic research report. If you are no longer interested in China Resources Medical Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.